The holy trinity of capex f*ck ups

33 years.

That was the age gap between Graham and I.

Graham was the longstanding, distinguished, COO of the business unit.

And here I was the new CFO alongside him, and less than half his age.

And he made sure I knew it. You’d think the elder statesman of the exec team would take it upon himself to welcome me.

He did the exact opposite. 

He would patronize me at every opportunity, refuse to cooperate, and frequently announce the business would ‘go to the dogs’ after he was gone, as it had been left in the ‘hands of kids.’

I tried to play nice with him, but it wasn’t going to work.

I soon discovered that there were two reasons for his behavior: 1) He was just a bit of an a**hole and 2) His legacy was being threatened.

Graham was set to retire in 12 months. And his last contribution was a major capex project. A $65m capex project.

This was to be a defining project for the business, redesigning a huge part of the operation. Leaving us with a state-of-the-art supply chain for the next decade and beyond. Leaving Graham free to walk off into the sunset a hero.

Well… that was the story he was telling anyway. And if he delivered what he promised that would have been how it played out.

Getting a clear read on the status of the project was hard. We knew what had been spent to date. But my team was struggling to get what they needed from Graham and his team to understand the latest total project forecast.

I was able to forcibly extract it from Graham over several weeks. And as I learned more, it all started to make sense.

The project was a disaster.

Heading for a massive overspend. It would be delivered later than expected. And below spec. 

Off budget, off plan, off spec. The holy trinity of capex f*ck ups. Nice one, Graham!

Graham had known this, hence his particularly unpleasant PR campaign. And his attempts to divert attention away from anything other than his own project.

I was able to use the facts found in the numbers to blow the lid on this mess. As a result, Graham’s retirement was accelerated by 12 months.

To make matters worse, I would later discover that one of his team members had taken kickbacks on one of the contracts.

There was a lot of cleaning up to do. And with Graham out of the way, we could get started.

But this experience took its toll. It left me wondering whether I was ready for this sort of heat…

I remember my first CFO job

I found my first experience in the C-Suite seriously tough.

As a natural introvert, I get nervous being the new guy in any group. But especially in a high-stakes setting, with a group of highly capable people with strong personalities.

This week I will share the techniques I’ve used to tackle imposter syndrome (and quiet the accompanying mindtalk.)

My worst experience with imposter syndrome hit a few months into my first CFO role. What I share will be through that lens, but much of what follows will be useful in a range of scenarios.

Let’s start with a simple model I use whenever I find myself in front of a daunting task. Like a big new job.

I call it the happy-sad-dumb-smart matrix.

Other models are similar (emotional cycle of change, hero's journey, etc), but I like this because it’s simple.

At any big new job, you go through four stages, in order as marked on the matrix. And knowing where you are on that journey is powerful. Because by understanding which stage you are at, you can manage your own expectations of yourself.

Let’s take each in turn:

Stage 1: Dumb & Happy

A new role starts with you being dumb and happy. There are worse places to be…

Excited about the new opportunity, but blissfully ignorant about the challenges ahead. You know there will be hurdles to success, but don’t know what they are. You have full confidence you’ll work it out, because why else would you have taken the job?

You know that first day in a new company… when you get shown around to shake a bunch of hands and smile and say hello? At least one person you meet (and probably more) will be thinking ‘wow they have no idea what they have signed themselves up for’.

You are happy and you are dumb.

By the way, I don’t literally mean ‘dumb’. I mean uninformed about what’s ahead of you. But I prefer short words…

Stage 2: Dumb & Sad

Soon you will fall out of the honeymoon period. It might take a month, it might take 3, or even 6. But you’ll start to realize how much there is to do.

At this point, you’ll slip down into the dumb and sad box. Your C-Suite colleagues are starting to expect things from you, but you don’t necessarily have the solutions at your fingertips. There is still too much you don’t know. And naturally, you start to doubt yourself.

If you are going to suffer from imposter syndrome, this is when it’ll rear its head. Still paralyzed by the ignorance of being a noob. But here long enough to absorb the scale of what you’ve taken on.

Everyone assumes you know all the company jargon and acronyms (you don’t). So they stop taking the time to slow down and explain. How quickly they forget how hard it is to be the new kid on the block. Even in a big job.

Sidenote: one notable benefit of being promoted into a C-Suite job internally, is that you don’t have the challenges of learning a new business, while you are learning a new level.

The hardest thing at this stage is that you still won’t know what you don’t know. The role will feel vaster than it is, and that is intimidating in itself.

Stage 3: Smart & Sad

But over time, with a bunch of hard work, the fog starts to lift.

The good news is you now know what you know and what you don’t. The bad news is that there is so damn much to do. This is the domain of the smart and sad.

You haven’t been able to get the people and the processes in place to do what you know needs to be done. But, hey, at least you understand the full extent of the job.

At this stage, you are aware of the inevitable flaws in the assumptions you made earlier when you were looking from the outside. And can build a credible plan.

You have most of your team in place and they are working on the right things. Moving at pace, but with a lot of ground to cover.

Stage 4: Smart & Happy

Now, as you start checking things off the to-do list you built in stage 3, life starts to feel easier. You can achieve 10x more than you were in the first 3 stages (with less effort).

Congratulations, you are in the smart and happy box. The finance team is  ‘your’ finance team, and you feel like you are in control. This is a nice place to be. You now know what levers to pull to get things done.

By putting the blood, sweat, and tears in, it feels a bit like you are playing the game in easy mode. The relationship between the effort you put in and the tangible results you deliver has transformed.

That impossibly complicated piece of analysis the CEO asked you for during month 1 now feels easy. Partly because you’ve improved processes and developed the team. Partly because you can anticipate the requests.

There are rich learning opportunities to be had in this stage as the increased output opens new doors and opportunities. You’ve got headspace for more projects and a wider scope than you had before.

Eventually, those learning opportunities will have diminishing returns, and it’ll be time to move on to a bigger challenge. And a new happy-sad-dumb-smart journey.

But there’s no rush. In fast-paced businesses with a lot of new challenges, it could be many years before that happens.

I’ve gone through this cycle with every new challenge I’ve faced at work (and out of work). Sometimes quickly. Sometimes it’s taken years.

The goal is to get through the stages as quickly as you can. The force of gravity will take you from Stage 1 (happy and dumb) into Stage 2 (sad and dumb) quickly enough. But it will take blood, sweat, and tears to get the understanding you need to get to Stage 3 (sad and smart), and the execution needed to get to Stage 4 (happy and smart).

Here are some things that can help you accelerate that process:

1) Choose your challenge

It’s going to take time and effort to get to that top right box. It has to be worth it. You need to pick challenges that are a) worth the payoff and b) you will get some enjoyment out of the process.

I’m finding that the same journey applies to this newsletter. It started as a passion project, that I could manage on the side of my desk in a few hours per week.

As time went on, I was faced with a choice. Did I want to keep it as a comfortable hobby posting 2 or 3 times per month, or did I want it to improve it to become the best community for CFOs on the internet?

I recently decided I do want to expand CFO Secrets. So I’m now on a mission to build the definitive resource for the most ambitious CFOs around the globe (big things coming in 2025!)

But making that decision is just the beginning. I know that it will come with another journey through the happy-sad-dumb-smart matrix.

And I couldn’t be more excited about it.

I’ve taken the view that if you are in a situation where you didn’t go through these four stages, I’d wager you aren’t pushing yourself hard enough.

2) Ask questions early

It can be tough being the new guy or gal trying to get up to speed. Especially coming into a C-suite.

Giving yourself permission to ask lots of questions early is super important. People will forgive you dumb questions in the early days. They might talk behind your back. But it’s a small price to pay. 

Of course, if those are still rolling in after 9 months on the job, your CXO colleagues might start to question your capability and fit for the role. And it’s hard to win people back when that happens.

Whatever you do, don’t end up like Cousin Greg:

Build good relationships with the rest of the C-Suite early, and explain to them that you like to ask a lot of questions. And that some of those questions may seem basic, but you insist on a deep first principles understanding of the business. And that your ‘dumb’ questions are how you get there.

Having no fear of sounding dumb in asking questions is crucial in your quest to get from ‘left to right’ on the dumb to the smart axis as quickly as possible.

3) Provide value early

Last week we talked about the ‘emotional bank account’. You are going to be drawing a lot of debits in the early months as you understand the business and get up to speed.

You’ll probably be overdrawn with most of your C-Suite peers 3 months in. That’s ok, that’s part of the process. But if you can find ways to repay them with real value out of the finance function early on, you need to do so.

Often it’s the practical stuff: cleaning up a sign-off process for marketing spend. Or improving a piece of sales reporting. Maybe delivering a finance update at the operations leadership meeting.

High visibility, low effort things that show you are an ally. You need to focus on ‘low effort wins’ so you don’t derail from the time you need to spend understanding the business.

In my baptism of fire with Graham, one of the ways I got him to open up, was by helping him out with some reporting the corporate team was pestering him for.

4) Make friends strategically

There is normally a nexus of power among a group of CXOs (often determined by their proximity to the CEO).

So it will help you to work your way into the inner sanctum over time, as you become more familiar with the business and personalities. There may also be some turnover in the C-Suite so you are no longer the new kid on the block.

In Game of Thrones when Jon Snow went North of the wall he had to befriend the Wildlings. He started on the outside but used good character and common ground to build trust. Eventually, he united them in a way that never seemed possible.

You want to get as near to the middle as you can over time. That is where control lies.

If you are near the center of the C-suite, you are better placed to be a force for good.

Just in the same way whoever controls Winterfell, controls the North…

5) The numbers are your friend

Don’t forget that as CFO, you control the fact base of the business’s performance. And how that fact base is shared with the C-suite and the business.

This is a big advantage.

In the earlier story, I had to force Graham’s hand. He’d built a false narrative around his swansong project. While the truth would have emerged eventually it would have done so through the fog and deception of Graham’s filter.

Exposing the facts in the right forum forced the correct debate.

Most of the time force is not necessary, but sometimes it is. And by controlling the numbers you hold the keys to the most powerful forcing mechanism in business.

6) Know when to bail

The journey will be tough. Hopefully, you make it through ok. Hopefully, it was worth the effort.

But that won’t always be the case. Sometimes it is soul-sucking and you made a mistake. Knowing how to identify that is important. As is picking the right moment to pull the plug.

The right moment is when you are in the bottom right quadrant of the happy-sad-dumb-smart matrix.

At this stage, you have done the hard work to know what you are dealing with.

I’ve seen CXOs bail before this. I find this poor practice on their part. In a leadership role, it’s incumbent on you to do a level of due diligence on the people and company you are working for before you take the role. Once you are in the seat, you owe it to the business to at least do the work to understand the full magnitude of what the role takes.

For most people and roles this might be 12 months. By this time you should have the depth of understanding to make an informed call.

Ask yourself these four questions:

1. What does the end of the journey look like? How good will it actually be?

2. How much work, time, and stress will it need to get there?

3. Is it worth it?

4. What are my alternatives?

Working through this with a coach is particularly powerful. Once, I was ready to bail on a role after 6 months. I was convinced I wouldn’t be able to deliver the changes I needed to make it what I wanted it to be. My coach at the time convinced me this conclusion was full of emotion, and conjecture. With very little fact.

We agreed to wait another 6 months. By then I was able to fully understand what I could achieve in the role, and what it would take.

After those extra 6 months had passed, I could see the forest for the trees. I knew what I would be able to change, and what I couldn’t. I’d moved from the bottom left to the bottom right on the grid.

I decided to stick it out and see it through. And I’m glad I did. It turned out to be one of the best career decisions I’ve ever made.

And on that happy note… we bring to a close this series on navigating C-Suite politics. In case you missed it, in week 1 we covered how to work well with the CEO, and in week 2 we covered how to work with the rest of the CXO

Michelle from Singapore asked:

Do you have any tips on what and how to communicate at company-wide or internal events? I’m particularly interested in insights from your experience in non-public companies.

As someone with a background in Finance and Accounting, currently in a Controllership role, I find it challenging to communicate financial results to a broad audience that may not be familiar with financial terms or concepts.

Hi Michelle,

The starting point here is to keep it simple. Most people in the business don’t see the financial results. So even the most rudimentary insights will be interesting to people.

You need to find the intersection of what the business needs people to hear vs. what the business wants them to hear. There may be certain messages at the event that you need to reinforce. For example, if the CEO communicates a hiring freeze, it doesn’t look great if in the next section you are on stage explaining a 25% increase in profits. So you need to understand the wider context of the presentation and match the tone.

You should check in with your CEO/CFO on what information they are happy to share. I’ve seen some CEOs who don’t like anyone to see the numbers other than the few in the finance team and the C-Suite. And others who would happily put them on a pinboard every month. So make sure you get clear upfront.

Avoid technical language like ‘revenue’ and ‘ebit’. Instead, use common language like ‘sales’ and ‘profit’. Selfishly, this helps you make friends across the business by coming across as more approachable and accessible than those other nerds in finance.

And get your slides ready early, and practice what you plan to say. The better you know your material the more natural it will sound on the day.

Sounds like you’ve got a big presentation on the horizon, Michelle. Good luck!

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And Finally

Next week we’re diving back into ERPs - specifically how to avoid a disastrous roll out.

Stay crispy,

The Secret CFO

Disclaimer: I am not your accountant, investment advisor, tax advisor, lawyer, CFO, director, or friend. Well, maybe I’m your friend, but I am not any of those other things. Everything I publish represents my opinions only, not advice. And certainly is not investment advice. Running the finances for a company is serious business, and you should take the proper advice you need.